Popularity contest

On Wednesday this week Nokia announced with pride that it had amassed one million Twitter followers. This, according to Twitter Counter, makes it the 1,373rd most popular account on Twitter. Is it a good thing to have lots of followers on Twitter? Is this something that Nokia should be celebrating? One interpreration of the news is that there are a lot of people out there indulging in post-purchase rationalisation, joining the tribe in a bid to convince themselves of the merit of a decision they’ve already made. This theory might be supported by the fact that Blackberry has 3.6 million Twitter followers.

November 15, 2013

11 Min Read
Popularity contest

By The Informer

On Wednesday this week Nokia announced with pride that it had amassed one million Twitter followers. This, according to TwitterCounter, makes it the 1,373rd most popular account on Twitter. Is it a good thing to have lots of followers on Twitter? Is this something that Nokia should be celebrating?

One interpretation of the news is that there are a lot of people out there indulging in post-purchase rationalisation, joining the tribe in a bid to convince themselves of the merit of a decision they’ve already made. This theory might be supported by the fact that Blackberry has 3.6 million Twitter followers.

Celebrating an increase in Twitter followers suggests an aspiration to climb the league table. In which case Nokia must seek to emulate the likes of Katy Perry, Justin Bieber, Lady Gaga, Taylor Swift, Britney Spears and Rihanna, all of whom are in the top ten. Let’s see what that last sentence does to the Informer’s hits this week.

Anyway, many of these million plus Nokia followers are about to get bombarded with sponsored Tweets as the micro blogging site extends its self service advertising platform outside of the US. Telefónica’s UK arm O2 announced a partnership with Twitter this week that will see the two firms collaborate on a programme to drive more Twitter-based promotional activities from UK small businesses.

O2 also launched a “social insights tool” for small businesses already exploiting the might of Twitter to their endless benefit. Among the facets of the new tool are a social league in which small businesses are invited to indulge in new forms of status anxiety by comparing their social media performance against that of their peers, and a dashboard that enables them to monitor their “influence and outreach milestones.”

This indeed sounds like the kind of statement you might associate with a social insights tool – as in: “Oh God, here comes that social insights tool. Don’t let him see you! He’ll only want to talk about frigging outreach milestones!”

O2 described the tool as “one of the best free resources available” and said that it saw it as “our responsibility as both a large corporate and a digital services company to guide [its SME customers]” in how to use Twitter. But O2 is only the 8,458th most popular account on Twitter. Surely the SME’s should be asking Gaga et al for their advice…

In other news relating to the Spanish incumbent, Telefónica has awarded Polish B/OSS vendor Comarch a contract to supply network planning and optimisation products and services to across the operator’s European footprint. It is the vendor’s first multinational deal with Telefónica and builds on a previous implementation with TelefónicaDeutschland, Comarch said.

Meanwhile Telefónica, which is in the process of divesting non-core assets and consolidating its position in key markets, is looking East for further expansion opportunities. The firm’s Global Solutions division has announced the opening of a new office in Singapore that will, it said, enable it to better serve its MNC customers in the Asia Pacific region. And the firm made some LTE headway this week, switching on a nationwide Chilean LTE service.

Let’s nip back to Poland for a little more local news: leading Polish pay TV operator CyfrowyPolsat has agreed to buy a majority stake in the market’s third-placed mobile operator Polkomtel, in a deal worth roughly PLN5.15 billion (€1.23 billion). Cyfrowy, which had 3.55 million pay TV subscribers at the end of the first half this year, according to Informa’s WBIS, said the deal will establish it as “the largest media-telecommunications group in Poland.”

The firm said it will buy an 83.8 per cent stake in MetelemHoldingCompany Limited, the firm that holds full control over Polkomtel – which had 13.9 million mobile subscriptions at the end of the third quarter (WCIS+) – in exchange for Cyfrowy Polsat shares.

In-market consolidation is a popular trend of late, as mobile operators look to multiplay offerings for a greater degree of customer adhesion than is afforded by mobile access. But it’s not quite the panacea that some might have us believe, at least according to TelekomAustria.

The Austrian incumbent put out its Q3s this week, which included the disappointment that net profit had dropped 48.3 per cent year on year to €52.13m on the back of revenues that declined 5.3 per cent to €1.04bn.

The firm, which operates in eight markets across Central and Eastern Europe, said that it saw a “substantial revenue decline” at its Austrian, Bulgarian and Croatian operations, while there was a slight increase for its Belarusian property.

In its domestic market Telekom Austria was actually negatively impacted  by the migration of customers into multiplay “all-in tariffs” the firm said, with the decline in fixed voice usage “only partly offset by higher broadband and TV revenues.”

Telekom Austria added that intense competition across all of its markets remains a significant challenge, and described European Commissioner Neelie Kroes’ plans for a single European telecoms market as a threat.

“Fierce competition presents an issue in almost all markets, exerting downward pressure on mobile prices,” the firm said, adding that its economic performance therefore depends on its “ability to safeguard margins by continuously increasing cost efficiency.”

It continued: “Furthermore, regulatory provisions in the form of interconnection and roaming rate reductions cause added drag on revenues, especially in those segments which must conform to EU regulation. In addition to existing glide paths, the proposal for a single European telecommunications market currently awaiting approval by the European parliament poses a threat.”

Vittorio Colao, chief executive at Vodafone, was more diplomatic as the firm released its half year results. Although he made the now traditional references to tough competitive and regulatory environments, he said he felt encouraged by “the potential for a shift in regulatory focus to support greater industry investment and consolidation.” Vodafone reported adjusted operating profit for the period of £5.7bn on revenues of £22bn.

Vodafone is shortly to give shareholders a massive dividend from the sale of its stake in Verizon Wireless, of course. Elsewhere in the US T-Mobile announced plans this week to raise $1.6bn through a share offering in order to bolster its coffers for future capital investments and opportunistic acquisition of  spectrum, through either private transactions or future auctions.

Last month Telekom Austria dropped a sum roughly equivalent to its quarterly revenues on LTE spectrum for its home market. This auction drew criticism from some quarters for taking too much money out of the market and creating an imbalance in holdings of valuable spectrum assets. This week the managing director of spectrum-specialist consultancy Coleago had a pop at auctions in general, particularly their use in renewal processes.

“The problem with an auction for existing spectrum rights is that any new entrant knows they will be outbid by the incumbents so the auction will only be contested by the existing players,” said Friend. “The regulator, having worked so hard to avoid spectrum imbalances, will almost certainly put in place caps to ensure that spectrum does not end up being concentrated in just one operator’s hands. The result is that the allocation of the spectrum will change little and, more likely than not, the spectrum will be sold at the regulator determined reserve price as was the case in Singapore.” You can read the full piece here.

This is pretty much what happened in Belgium this week as the market’s three mobile operators, Belgacom, Mobistar and KPN-owned Base each received 2 x 10MHz of 800MHz spectrum in the country’s latest spectrum auction, at a price of €120m per allocation. There were no other entrants in the auction, which was run by Belgian regulator BIPT.

The licences require that LTE services be available to 30 per cent of the population within two years, 70 per cent within four years and 98 per cent of the population within six years. Mobistar, which is the only one of the three Belgian operators that has yet to launch LTE, won the licence with the most demanding coverage obligations, which will require it to provide coverage to an additional 60 cities, mostly in Wallonia, offering 98 per cent population coverage of this area within three years.

Belgacom launched LTE at 1800MHz in November 2012, and had achieved 35 per cent population coverage by early June 2013, according to the GlobalMobileSuppliersAssociation’s Evolution to LTE report. Belgacom said that it expects to achieve 50 per cent population coverage for LTE by the end of this year. KPN’s Base launched LTE1800 last month in 15 Belgian cities.

The latest spectrum allocation will enable the operators to fill out their coverage and provide higher quality in-building penetration, they said. In a position paper released to coincide with the auction results, KPN said: “The 800MHz license will enable high quality indoor coverage that is at least on a par with Wi-Fi deployments. Customers will enjoy continuous 4G LTE services wherever they are.”

Reports emerged this very morning, meanwhile, that Belgacom CEO Dider Bellens is about to be sacked by the firm’s majority shareholder, the Belgian Government. Bellens, it seems, has been too openly critical of national and regional authorities in Belgium, with one choice (reported) observation being that Prime Minister Elio Di Rupo was, in holding his hands out for the annual dividend from Belgacom, like a child asking Santa Claus for a present. This apparently cut too close for Di Rupo, who has decided to give Bellens the old heave-ho ho ho!

In other departing CEO news, Günther VogelPoel has vacated the Captain’s Chair at Tele2Netherlands somewhat suddenly. The chair will be kept warm by Ernst Jan van Rooljen, the firm’s CFO, until a full time replacement can be found.

While in other Dutch news, incumbent operator KPN has announced a strategic alliance with AscomWirelessSolutions that will see the two firms develop joint offerings for the healthcare segment. KPN said the partnership will focus on cellular  technology and will develop and integrate applications with devices as well as providing implementation and maintenance services.

Back to LTE, though. You don’t get too many greenfield opportunities for LTE, partly for the reasons that Graham Friend offers in the piece referenced above. One region where new entrants can muscle in, however, is Africa.

One newcomer LTE operator, SmileCommunications, that has launched networks this year in Nigeria, Tanzania and Uganda would “happily prioritise Skype traffic” over standards-based voice services if that is what the market demanded, its chief operating officer told Telecoms.com. Tom Allen, COO at Smile, which is taking a disruptive approach to LTE services on the continent, said the firm has not taken the decision to prioritise Skype but that it would “look at it seriously” depending on customer demand.

“We don’t mind OTT services,” he said. “We sell megabytes, that’s the primary reference point for us. We don’t care when you use it and you can do what you want with it.” Incumbent operators with “a market to protect and a 3G investment to protect” lack the freedom to be so flexible, he added.

Mobile operators should try and get along with OTTs though, as they’re already munching through traditional operator offerings like the Very Hungry Caterpillar. (Now he wasn’t a very hungry start-up any more. He was a big fat Internet Giant Startup. He built a cocoon around himself etc… It’s a nice comparison until you get to the beautiful butterfly bit…)

Along these lines Informa Telecoms & Media has predicted that global annual SMS revenues will fall by US$23bn by 2018, to US$96.7bn, down from US$120 billion in 2013. The decline will largely be caused by the continuing adoption and use of over-the-top (OTT) messaging applications in both developed and emerging markets, ITM said.

By region, Asia Pacific  will experience the highest drop in annual SMS revenues over the forecast period, falling from US$45.8bn in 2013, to US$38bn in 2018.

OTT messaging apps have also particularly taken hold in those Western European markets which have seen their economies weaken in the wake of the global financial crisis of 2007-2008, such as Spain and Italy. Informa estimates that, in Western Europe, Italy will see the steepest decline in its SMS revenues, falling to US$2.2bn in 2018 from US$3.3bn in 2013, representing a compound annual growth rate (CAGR) of minus 7.54 per cent.

Almost none of the 59 countries and seven regions covered by Informa’s World Cellular Revenue Forecasts are immune to SMS revenue decline over the forecast period, although some markets – such as Argentina, Colombia, Egypt, Japan, Kenya, Nigeria Turkey, Uganda and the United Arab Emirates – will continue to experience growth for the next two to three years, the firm said.

And SMS ain’t dead yet: “Although we are forecasting a decline in SMS revenues, due largely to the well-documented competition from OTT players, the diverse messaging market provides so many complementary use cases that it would be naïve to think that SMS has no future role to play,” said Gareth Sims, ITM’s chief seer.

Finally this week TelecomItalia, which is desperately trying to reduce its debt, sold some more of the family silver this week, namely its stake in TelecomArgentina, for $960m. The buyer was Fintech. Telecom Italia also suffered the ignominy of having its debt rating downgraded to junk by StandardandPoor’s this week.

Take care

The Informer

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